Q1 Report 2019/20 4 September 2019 Lotta Lyr, President & CEO - - PowerPoint PPT Presentation

Q1 Report 2019/20

4 September 2019 Lotta Lyrå, President & CEO and Pär Christiansen, CFO

The numbers provided in this presentation may be affected by the application of IFRS 16. For more information, please read Restatement of financial information according to IFRS 16.

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Good sales performance and strengthened result

• Strong demand during summer indicating

appreciated assortment and successful campaigns

• Taking next step in terms of availability and

convenience through Kolonial collaboration

• Continued optimisation of store network
• CO100+ implementation on track

− Positive effects from implemented initiatives − High speed in both growth and cost savings initiatives

• Delivering in line with guidance on margins

Passionate about simplifying life in all kinds of homes

Agenda

• Business update
• Financial development
• Events after reporting period
• Summary and Q&A

Q1 2019/20 in brief

• Sales up 4 per cent, organic sales up

4 per cent and LFL sales up 4 per cent

• Online sales up 20 per cent
• Gross margin at 38.1 per cent (38.5)
• Improved operating result, both reported

and underlying

• Full focus on lower costs when

implementing CO100+

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CO100+ UPDATE

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Strategy defined in CO100+ action programme

Average annual organic sales growth of 5% during the current five year period Operating margin of 6-8% from FY20/21 and onward 1-2% of the underlying operating margin invested in sales growth and cost savings initiatives during FY18/19 and FY19/20 Cost savings initiatives 200-250 MSEK  More efficient organisation  More optimised assortment  Indirect purchasing, sourcing and logistics more systemised Growth initiatives  Sales per customer increases  Sales per square meter increases  Sales online to double every

• ther year

An action programme… …focusing on strategic initiatives… …to achieve Clas Ohlson’s financial targets

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Unique position in terms of availability and convenience

• Being close to the customer is set to

become increasingly important

• Convenience and availability is key

− Relevant assortment − Stores in good locations − Improved e-com − Multiple delivery options

• MatHem partnership showing good

progress

− Similar consumption pattern for consumables (Clas Ohlson) and food (MatHem)

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Partnership with Kolonial contributing to our unique offering

• New partnership with Kolonial.no, the

largest online food store in Norway

• Offering new sales channel and smart

delivery options for our products to Norwegian customers

• Clas Ohlson products available to

customers on Kolonial’s platform as from today

• High expectations on Kolonial

collaboration after the success with MatHem

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Increased online sales

• Online sales Q1 19/20 increased compared

to same quarter 18/19

• Online sales showing increasingly improved

profitability

• Investments in back-end for responsiveness

MSEK

5 10 15 20 25 30 35 40 45 50 May June July 18/19 19/20

A profitable store network

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• Growth mainly expected online but majority of

sales still in Clas Ohlson’s stores

• The stores provide customer experience, services

and the opportunity to pick up goods ordered

• nline
• Profitable stores necessary for our goal of

sustainable profitable growth

− Increase sales per square meter − Review of leases in the Nordics − Close or relocate non-profitable stores − Selectively open new stores in areas with significant potential

Optimising our store network

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2 97 42 90

• Continuously ensuring that our stores are in

attractive locations, with a relevant format and profitable is a priority

− Decision to close 4 stores in Finland and 1 store in Sweden FY 2019/20

• Part of on-going restructuring of store network in Finland

− 4 contracted upcoming store establishments in FY 2019/20

• Increased store density in the major cities – new store to
• pen in Fältöversten, Stockholm
• Closing of store network in the UK and Germany

according to plan

FINANCIAL DEVELOPMENT Q1

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Sales Q1

• Q1 sales 2,044 MSEK, up 4 per cent
• Organic sales up 4 per cent, LFL sales

up 4 per cent

• Online sales increased by 20 per cent
• Unchanged number of stores net

compared to Q1 last year (14)

MSEK +4% 1,770 1,763 1,783 1,958 Q1 15/16 Q1 16/17 Q1 17/18 Q1 18/19 Q1 19/20 2,044

Sales trend per market

14

MSEK MEUR

*Effected by store optimisation in UK and Germany

Sweden Norway Finland Outside Nordic countries

MNOK MSEK

+8% +6%

806 825 817 865 937 Q1 15/16 Q1 16/17 Q1 17/18 Q1 18/19 Q1 19/20 86 76 57 69 32 Q1 15/16 Q1* 16/17 Q1* 17/18 Q1* 18/19 Q1* 19/20

• 54%

657 675 691 740 761 Q1 15/16 Q1 16/17 Q1 17/18 Q1 18/19 Q1 19/20 19 20 21 22 23 Q1 15/16 Q1 16/17 Q1 17/18 Q1 18/19 Q1 19/20

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Gross margin Q1

• Gross margin down with 0.4 percentage

points to 38.1 per cent (38.5)

• Negatively impacted by stronger

purchasing currency (USD)

• Reviewing and reducing purchasing

prices as part of CO100+

• Continuously reviewing the pricing on

products

% 40.4 39.1 40.5 38.5 38.1 Q1 15/16 Q1 16/17 Q1 17/18 Q1 18/19 Q1 19/20

• 0.4 pp

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Share of selling expenses Q1

• Share of selling expenses 31.4 per cent

down 2.3 percentage points

• Excluding the effect related to IFRS 16
• f 1.2 percentage points, the share

decreased by 1.1 percentage points

• Impacted by lower costs in the UK and

Germany, partly offset by costs related to CO100+

% 31.0 31.9 32.1 33.7 31.4 Q1 15/16 Q1 16/17 Q1 17/18 Q1 18/19 Q1 19/20

• 2.3 pp

Administrative expenses Q1

• Administrative expenses decreased

compared to previous year

• Amounted to 58.7 MSEK (63.0)

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MSEK 49.2 49.4 49.8 63.0 58.7 Q1 15/16 Q1 16/17 Q1 17/18 Q1 18/19 Q1 19/20

Application of IFRS 16

• The main impact of IFRS 16 on the Group’s

reporting is attributable to the recognition of leases for premises

• The operating profit for Q1 was charged

with depreciation of right-of-use assets instead of expenses for operating leases

• Operating profit for the quarter was

positively impacted by 27 MSEK

• EBITDA was positively impacted by

139 MSEK

18

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Profit Q1*

• Operating profit improved to 79 MSEK (32)
• Underlying EBIT improved to 91 MSEK (62)
• Operating margin 3.9 per cent (1.6)
• Earnings per share 0.77 SEK (0.47)

106 75 100 32 Q1 15/16 Q1 16/17 Q1 17/18 Q1 18/19 Q1 19/20 Operating profit MSEK 79*

*Affected by the application of IFRS 16

52 60 53 49 22 Q1 15/16 Q1 16/17 Q1 17/18 Q1 18/19 Q1 19/20

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Investments

• Total investments 22 MSEK (49)
• New stores and refurbishments

11 MSEK (7)

• IT systems 11 MSEK (33)

MSEK

2,038 1,937 2,345 1,983 1,937 1,955 Q4 17/18 Q1 18/19 Q2 18/19 Q3 18/19 Q4 18/19 Q1 19/20

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Financial position

• Cash flow from operating activities was

310 MSEK (-28)

− Inventory 1,955 MSEK (1,937) − Inventory turnover rate DC 5.7 (6.2)

• Cash flow after investments and financing

activities of 1 MSEK (-17)

• Net cash of -14 MSEK (37)
• Approved credit facilities of 850 MSEK

MSEK

Events after reporting period

611 665 671 725 740 Aug 15/16 Aug 16/17 Aug 17/18 Aug 18/19 Aug 19/20

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August sales

• Sales 740 MSEK, up 2 per cent
• Organic sales up 2 per cent
• LFL sales up 3 per cent
• Online sales up 36 per cent
• Reduction of 1 store net compared

to end of August last year (13)

MSEK

SUMMARY

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Summary

• Growth both in stores and online

− Organic growth in the Nordics up 6% in Q1 and up 4% in August

• Delivering in line with guidance on margin
• Unique offering – assortment, availability

and convenience

− Kolonial partnership in Norway

• Ongoing store optimisation
• High pace in CO100+ cost initiatives

Q&A

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